Expert insight
Why the Fed might choose to forgo rate cuts
March 04, 2024
The Federal Reserve has done a remarkable job in bringing down inflation. But with a surprisingly strong economy and labor market, it may be premature for the Fed to cut interest rates this year.
In a guest column for Barron’s, Joe Davis, Vanguard's global chief economist, said that instead of a hard or soft landing for the economy, there’s an overlooked third alternative—no landing at all. Conditions evoke a similar landscape nearly 60 years ago, when the U.S. economy overheated after rate cuts and the Fed had to raise rates aggressively in response.
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Related links:
- Our investment and economic outlook (article, issued February 2024)
- Reasons for caution about U.S. equity valuations (article, issued February 2024)
- The buoyancy of bonds (1-minute video, issued February 2024)
- Vanguard’s economic and market outlook for 2024 (3-minute video and article, with links to more detailed regional outlooks, issued December 2023)
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